South Korea's Chip Inventory Ratio Hits 26-Year High, Signaling Oversupply

On March 5th, according to the Korean Statistical Office, South Korea's chip inventory ratio in January was 265.7%, the highest level in nearly 26 years since March 1997. The chip inventory ratio is calculated by dividing the inventory index, which is adjusted for seasonal factors, by the shipment index to show the ratio of shipments to inventory. In January, the chip shipment index (adjusted for seasonal factors) was 71.7, down 25.8% from the previous month, while the inventory index increased by 28% to 190.5. A high chip inventory ratio means that supply exceeds demand.

According to the Ministry of Trade, Industry and Energy, total exports in January, excluding chips, increased by 0.8% year-on-year to $44.1 billion. However, total exports, including chips, decreased by 7.5% year-on-year to $50.1 billion, declining for five consecutive months. This is due to the continuous decline in chip exports for seven months.

South Korea's chip inventory ratio reached a record high of 265.7% in January, indicating a surplus supply. The chip shipment index decreased by 25.8%, while the inventory index increased by 28%, resulting in an unbalanced market. This situation has impacted South Korea's economy, with total exports, including chips, declining for five consecutive months. It is important to keep an eye on the supply and demand trends and adjust the inventory accordingly.